Zuma gets down to business in the Middle East

Khadija Patel

Khadija Patel

Khadija peddles words on street corners, in polite company she's known as a journalist. Words are her only defence against impending doom, old age and iniquity - spurring her interest in what language tells us about where we are from, what we are doing and where we are headed. Don't mind the headscarf, she don't need no liberation.

President Jacob Zuma continued his tour of the Arabian Gulf on Tuesday. He is expected to sign a "Supplementary Protocol amending the Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income” in Oman – the so-called “sleepy Sultanate”. By KHADIJA PATEL.

On Saturday, Zuma was in the Democratic Republic of Congo where he witnessed the signing the Memorandum of Understanding on the Grand Inga Project, an ambitious hydropower project that may well revolutionise energy supply on the African continent. “It is a day to prove Afro-optimists right and a day of celebration for South Africa too,” Zuma declared before hopping on a plane for the Arabian Gulf.

In the Gulf, Zuma arrived with the noble intention of sourcing new investment opportunities for South African capital. Visiting the United Arab Emirates and Oman, Zuma has so far focussed on clearing the path for South African businesses to operate more effectively in the region. In his meeting with the head of the United Arab Emirates, President Shaikh Khalifa bin Zayed Al-Nahyan, Zuma raised his concerns over the continued ban on the import of South African horses and meat produce. On average South Africa is said to export 100 horses a year to the Middle East making the region South Africa's biggest trading partner for horse exports. Zuma also signed a string of trade and economic agreements in Abu Dhabi before he travelled to neighbouring Oman.

The presidency has emphasised that “both Oman and the UAE are important markets for the South African defence industry”. Of course, South Africa also owes more than 50% of its crude oil imports to the Gulf States. This excessive dependence on imported oil from a high-risk region like the Gulf makes South Africa particularly vulnerable to frequent economic and security headaches. While energy security analysts believe South Africa should further diversify the source of its oil imports, the government has shrugged off such recommendations.

Intriguingly, Zuma’s current foray into oil-rich countries has led him away from the likes of Qatar and Saudi Arabia and taken him instead to Oman. The economy of the “sleepy Sultanate” is one of the lesser known economic success stories of the region. Its oil wealth does not rival the better endowed of its neighbours in Saudi Arabia and the UAE, but oil has still been vital to the growth of its economy. In recent times Oman has been embroiled in the dilemma of trying to modernise its energy dominated economy without mitigating the power of the ruling al-Said family.

Recognising the importance of developing a dynamic entrepreneurial class, the Omani government under Sultan Qaboos has tried to stimulate broader-based economic development. Qaboos has sought to expand exports of natural gas and has concentrated a great deal of effort towards the development of gas-based industries. Courting foreign investment in its petrochemicals, electric power and telecommunications industries, Oman has succeeded in creating a more diverse economy than other Gulf States.

In March this year, Yusuf Saloojee, the South African ambassador to the Sultanate, announced that Oman and South Africa were planning to form a $500 million joint investment fund to foster mutual investment. Months later the fund is yet to materialise but Saloojee indicated on Sunday that the creation of the fund was on Zuma’s agenda in Muscat, the capital of the Sultanate. “It is in the pipeline and we will discuss that,” Saloojee said.

Saloojee said although both countries are looking at signing a series of agreements on mutual cooperation, only an agreement on the avoidance of double taxation has been readied for signing during Zuma’s visit.

Last year, two-way trade between Oman and South Africa amounted to a paltry $117 million.

"South Africa's bilateral trade with Oman remains relatively low. However, there is a potential for growth. And I think we can do far better," Saloojee is reported to have said. He added that 70% of South Africa's exports to Oman have been iron and steel products, while its imports are principally mineral products.

This year has left Oman vastly changed. The sleepy Sultanate has not been averse to the demand for change that has so dramatically gripped the region. Omani commentator Ra'id Zuhair Al-Jamali points out, “The Economist scored Oman sixth highest within its (unsophisticated) Arab instability index in early February, a forecast met with wide incredulity at the time. A few weeks later, the country was shaken with memorable scenes of unrest: protests - some violent, most peaceful, loyalty marches, regime concessions, a GCC ‘Marshall Plan’, labour strikes and opportunistic demands and regime crackdowns.” While other Arab states continue to defy the demand for change, Oman has proved more pliant. “The ground has significantly shifted beneath the feet of a regime that has overseen the rapid transformation of society over the last 40 years, underwritten by absolute power and facilitated by oil income,” Al-Jamali says.

Two weeks ahead of the much-feted Tunisian elections last month, Oman held its own parliamentary elections. “Nobody paid them much mind,” Al-Jamali says. South Africa, however, has been alert to the boons business with the sleepy Sultanate may bring. DM

Khadija peddles words on street corners, in polite company she's known as a journalist. Words are her only defence against impending doom, old age and iniquity - spurring her interest in what language tells us about where we are from, what we are doing and where we are headed. Don't mind the headscarf, she don't need no liberation.